I have all these same questions. Hopefully you anons can chime in from the last thread and address these posts. (Looks like the mods 404'd it due to inappropriate language.)
Taxes & Crypto
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THEY DO IT FOR FREE
Yeah, no matter what people say, some aspects of this website have gone downhill for sure
It seems IRS requested the thread deletion.Can't find other explanation which means there were legit "solutions" in the thread.
It was really just a bunch of general info, which I guess is 'dangerous' or something, but it's certainly not particularly nefarious. I myself just want general info so I have a full understanding of the law
It was pro tax evasion, that's why. Notice how all pro-tax threads are never deleted and are still up.
That's why I said inappropriate language. Nobody wants to pay taxes, that doesn't mean we shouldn't look out for our own interests
Whatever faggot mod deleted that thread needs to unironically kill himself
Try not to get this thread deleted tho
REEEEEEE WTF IS "Inappropriate language" on Veeky Forums?
>I will say that if there's no 1099 involved, you're on a voluntary reporting basis.
This is what I was wondering about. I'm curious as to how the IRS actually ascertains the income of citizens who haven't filed but have only worked jobs under the table, etc.
implying something illegal is my best guess
step one: literally everybody go buy a ream of paper
step two: get out your pen
step three: write "Abolish the IRS"
step four: sign it
step five: pass on your ream of paper while you receive another's
step six: sign it
step seven: pass on this ream of paper while you receive another's
>This is what I was wondering about. I'm curious as to how the IRS actually ascertains the income of citizens who haven't filed but have only worked jobs under the table, etc.
Ok so what about this scenerio (I will be paying taxes)
> Turn $3K into $100K.
> Cash out 80K to buy house.
> Can't cash out on exchanges
> Sell it all for gold on JM Bullion
> Sell gold back to them for a check - 3% loss.
> Deposit in bank account
HTF is my bank account not reporting to the IRS? And even if they aren't now - if I get audited in the next 5 years I'm fucked right?
This is why it seems like a bad bet to try and get away w no taxes. They can look at my rental property and say "Where did that come from when you make $40K a year?"
yeah! that's the spirit you fucking faggot!
Bank has to report transactions exceeding a total of $10,000 in a 24-hour period, that's all I know about that
Also check this out
I asked them about this and they said they didn't since it was a check only cash (doesn't make sense to me but IDK)
they didn't what?
ultimately you have to stay below those limits
Good info on JM Bullion.
>I asked them about this and they said they didn't since it was a check only cash (doesn't make sense to me but IDK)
I asked the bank because 10K because this was my understand as well. And that they had to ask you for the source of the income.
I asked if they needed to know the source and they said "No only for cash".
Basically I'm right. Don't try to get away with evasion for > $10K
that's a 24 hour period though
I'm wondering about my situation for example, 20k ETH sold but never received a 1099 from Coinbase (bought 17k worth)
i just added up all my csv's at cointracker and apparently i only owe $25. but i've already filed for this year so they ain't getting shit.
tax fraud is serious, that's why only poor people consider it. if you plan on being rich one day, just pay them so you don't ruin your life.
there's a difference between tax fraud and what we're discussing, friendo
"making up dates" and shit is fraud friendo
noted, thank you for your contribution
if you want real advice on tax avoidance you'll need to hire an expensive tax attorney, not get it here
I understand, thanks again
Plus you can never cash out on exchanges in the future
I sometime arbitrage from fiat exchange to bittrex so this option is out for me
Sell the gold piece by piece and then make small deposits into the bank, it could be time consuming but at least you keep the money.
Where do I enter crypto gains on free tax sites like turbo tax
Serious question, do I have to pay taxes if I never cashout? Not planning on cashing out or spending for however long it takes for me to be free.
yes you do. each trade is taxable. everytime you make a profit, set aside 30% for the IRS
Thanks senpai. I only buy bitcoin and move it onto my trezor so I assume Im fine since Ive never bought an altcoin in my life.
I believe some user in the previous thread said that as soon as you convert to fiat the feds will be alerted.
what do you mean?
>Sell the gold piece by piece and then make small deposits into the bank, it could be time consuming but at least you keep the money.
And the IRS doesn't somehow flag you for having tons of cash in your account but only x reported? I guess it'd have to be reported to them in the first place, but I assume that happens on the back end and can be inferred from various things that do get reported to them
alright, lemme lay it out for all of you burgers
you are taxed on NET gains in USD for short and long term capital gains, not transaction volume.
If your total profit from all realized trades is 500k, but your net gains is 200k that means you also realized 300K in loses on losing trades.
you calculate net gains in USD equivalents at times of transactions to determine tax obligation. Try using a crypto-tax software like bitcoin.tax, yes they charge you money, but you can list it as a deduction on the next years tax form.
For instance, at the end of the calendar year I had about 41k in realized gains off of 9.5k total investment over that calendar year. after that point I hit an ATH at 60k, and have since dropped back to about 30k.
that 30k loss counts as realized losses which counteract the 20k profit from the start of the year so currently my net for the year is -12k or so, in both realized and unrealized. any realized loss can be listed as short term loss which you can deduct from taxes at a rate of 3k per year. If between now and the end of this calendar year, my account grows back to 60k, I cash out making all gains and losses realized gains/losses I will owe taxes on the net change from end of last year to end of this year so (60-41=19k). If I don't trade much, and all that profit is in unrealized gains from trades that I entered but didn't exit before the end of the calendar year, I would still be at the -12k net gains figure because I realized those losses but have not realized any of the gains that come afterwords.
Just use a software solution and talk to a basic advisor to ensure that the numbers from the software will hold up, and about using and setting up Roth/IRA or 401k to limit tax burden and to distribute gains into long term accounts.
In some cases this is simply impossible, bitcoin.tax does not correctly account for deposits etc, you have to manually do a ton of shit if you did anything other than trading on basically one or two exchanges
Yes you are
Unless you lock those sweet gains :)
alt coin transactions are calculated using the USD equivalent at time of the trade.
for instance, if BTC is at 10k, and you buy 10 of shitcoinx at a value of 100k sat each for a total of 1 mil sat or 0.01 BTC your cost basis at time of trade will be $100
instance 1: realized gain
you sell your 10 shitcoinx at 1mil sat each after a 10x for a total of 0.1 btc with BTC at 10k USD your realized gain is 1000-100=$900 (realized-initial)
instance 2: realized loss
you sell your 10 shitcoinx at 1 mil sat each for 0.1 BTC but in that time BTC has declined from $10k to $100. Your realized value in USD is then 100*0.1=1 so while you have made "gains" relative to BTC in USD equivalents at times of trade you have a realized loss of $1-$100= $-99 (realized value in USD-intial in USD) which you can then add to your net change, which since it's a negative number, decreases your realized gains and deduct from your net.
If at the end of the year your net realized gains exceed net realized losses (remember to track long and short term gains separately) then you have a net positive which you pay taxes on. If you have realized losses exceeding realized gains, you can deduct up to 3k per year from your tax burden in losses and roll over anything over 3k to the next year.
>implying taxation is legal or moral
>implying the IRS can actually do anything
>inb4 the Capone meme argument
If you buy an asset, and never sell that asset for anything else, you do not have to pay taxes.
That is, until you eventually sell for some reason, at which point you will owe taxes as either short term or long term gains tax depending on if the holding period of each amount bought was less than or greater than one year ago. I'd assume that the determination of which portion you take it is based on first-in first-out but I'm not entirely sure and you need to verify this.
ex: you bought 1 btc 2 years ago and held, and you bough another 1 btc 6 months ago, you then decide to withdraw one btc. is ther btc you withdraw considered to be the one you bought 2 years ago, meaning you only have to pay long term gains tax, or is it the btc that you put in 6 months ago, meaning you would have to pay the higher short terms gains rate. this needs further research but shouldn't be too difficult to determine.
due to the lack of proper accounting measures and newness of the technology, you need to operate on best reasonable practices. everyone with half a brain knows that the current tax laws are stupid beyond belief. you should ask a professional about this, but I've heard other professionals say that if you submit accounting using a reasonable standard/accounting and do so in good faith, the burden of proof of wrongdoing is then transferred to the IRS, which, unless you've been doing some really shady shit, won't audit you because of the difficulty of the audit to prove wrongdoing vs the time/investment required.
If you don't report, and the IRS audits you, you must pay whatever figure they determine, and then the burden of proof is on you in order to prove their "arbitrary number" wrong through a rigorous accounting, and digging through the bureaucracy to get your money back.
The first case is obviously the most preferable case, even if it isn't an accurate measurement. Your burden/incentive is for that figure to not be more than you owe b/c bad accounting
>due to the lack of proper accounting measures and newness of the technology, you need to operate on best reasonable practices. everyone with half a brain knows that the current tax laws are stupid beyond belief. you should ask a professional about this, but I've heard other professionals say that if you submit accounting using a reasonable standard/accounting and do so in good faith, the burden of proof of wrongdoing is then transferred to the IRS, which, unless you've been doing some really shady shit, won't audit you because of the difficulty of the audit to prove wrongdoing vs the time/investment required.
>If you don't report, and the IRS audits you, you must pay whatever figure they determine, and then the burden of proof is on you in order to prove their "arbitrary number" wrong through a rigorous accounting, and digging through the bureaucracy to get your money back.
>The first case is obviously the most preferable case, even if it isn't an accurate measurement. Your burden/incentive is for that figure to not be more than you owe b/c bad accounting
Riddle me this
I received a 1098 for student loan interest paid for last year
did they send that to the IRS too? just wondering how this process works
>do or "invent" wash trades until your losses equate your gains
>completely legal because bitcoin doesn't apply to stock laws
>go to jail???
You sir are a genius, thanks for this great thought
SO, is it safe to say that if you are at your ATH then all you need to pay is total amount made- total amount invested?
and I guess from that I wonder: if not, how is the IRS aware of any of my activities whatsoever? beyond receiving copies of W-2's etc.
I'm not sure,
I am not a professional, and this is about the limit of my knowledge. I only know this through trying to figure out this issue for myself.
also, important to note is the difference in the regulation between 2017 and 2018, and the fact that the regulation is likely to further change as time goes on and the govt. figures their shit out
if you are at your ATH, and all of your gains were made within the current calendar year, this can give you a rough estimate of maximum tax burden depending on if you have realized your gains or not. that is the tricky part, and why you have to do proper accounting.
It is likely that you have some unrealized gains/losses from the previous calendar year and also some unrealized gains/losses from trades made within the current calendar year, which ruin the accuracy of this number.
you also have to provide records of trades on your tax forms so you need to do your accounting anyway. don't just pull a figure out of your ass.
what you are talking about is useful for getting a rough estimate of your maximum tax burden at the current moment. If you take your balance at the start of the calendar year, and subtract that from your current balance, that will be your maximum tax burden. this is because any variation in the figure will be caused by unrealized gains/losses which don't figure into your taxes for that calendar year. again, you have to watch out for short vs long term gains hear as some positions that you may have realized this year, but entered over a year ago.
certain entities are required to hand over info to the govt.
gdax/coinbase submits all info on accounts over 20k to the govt. not sure if that is maximum account balance at any point, or 20k of transaction volume.
also, you can do chain analysis for large sums.
If you transfer a large sum to a bank, the bank likely knows who to go to to get info on the transaction, and depending on that, govt demands info about your transactions
>certain entities are required to hand over info to the govt.
>gdax/coinbase submits all info on accounts over 20k to the govt. not sure if that is maximum account balance at any point, or 20k of transaction volume.
>also, you can do chain analysis for large sums.
>If you transfer a large sum to a bank, the bank likely knows who to go to to get info on the transaction, and depending on that, govt demands info about your transactions
My situation: I cashed out about 20k in total, but I bought about 17k. Bought probably 50 ETH and sold probably 70 ETH. So there's about 20 ETH that I "mined" (actually mined other coins, traded, etc.) It's impossible to do any accounting on this. To quote another user,
>Half of my exchanges died & I don't have records, I lost access to my phone that had others, etc.
So it's just fucked. But I only 'profited' 3k last year. If I just pay capital gains with 0 cost basis on that 20-ETH difference and call it mined, is that enough for the law? I assume I'm too small of a fish to be worth murdering
FWIW coinbase never sent me a 1099 (didnt meet 200 transaction requirement)
I have been in crypto for 6 months so long term capital gains is out of question
Plus I have all my holdings in fiat right now
Talking about accounting, I have 50k trades on different exchanges so auditing softwares will not work for me. I have heard excel can audit my trades within a day if I do it manually, is it true?
>I have heard excel can audit my trades within a day if I do it manually, is it true?
Get ready to spend countless hours or thousands on accountants to help you determine that you owe more than the value of your portfolio due to the market fluctuations
how much did you cash out to fiat?
One last thing
If I go from 30k to 60k. I owe tax on 30k
Now if I make a loss and again go to 30k,but again make gains and get back to 60k. I will have to again pay tax on 30k ,right?
And the loss from 60k to 30k can be deducted at the rate of 3k per year?
I'm not sure, you should talk to someone. I know that costs money, but you might be able to also list that as a deduction for the next year's taxes, ask the person you speak with.
as for mining, I believe that is considered to be like normal income and taxed as such.
I'm not sure of the specifics about what changes if you trade into a different asset, or receive your mining fee in an asset that was already exchanged to your liking, again, you should speak to someone, but I'd wager that if you consider it this way, if should be reasonable.
you mine 100 eth, at a value $10 each for 1k.
you hold that until you sell, at which point eth depreciates to $1 and you realize $100 of profit. that realized profit is the amount that you owe taxes on, and is taxed at the short term gains rate, which is identical to the income tax brackets/rates
if you "mine eth" but are paid in a different asset which is converted before you gain possession, it should be the same, as you are still paid an income for you work, but it is in a different form, similar to if you were paid in yen but has residence in the US/owed US taxes.
If you converted your income to a different asset yourself, I'd assume that you pay taxes when you make the exchange on the total value at time of exchange, and then any change from there forward would be equivalent to realized/unrealized capital losses
I do not know about excel vs software. there are software solutions that allow for large numbers of transactions but those come with a higher cost, which you can again deduct on the next year's tax payment.
if you have bought and sold in the same year (idk if it has to be same calendar year, or if it's a year from purchase, need to verify, lets assume both for this example) then your gains and losses are all realized, and you owe taxes on the total that you cashed out, minus your total initial investment. the issue is then how to account for everything you've done
that's pretty easy as I only have put in money once and then played only with principal + profits
So total cashed out- initial investment is pretty simple for me
FYI I went to a CA. He demanded 2k for the audit
I feel sick to the core
No clue, cashing out 100k has put you in a tight spot. You can pay short-term capital gains with a cost basis of 0 in the worst case that they're willing to audit IMO.
The IRS has this thing called good faith
Just pay your taxes and they're not gonna put you in prison or anything. Worst case they send you a bill for this plus penalties etc
parting with money is like living in a prison without being in an actual prison
no. this is the distinction between transaction volume and NET
you owe taxes on your NET REALIZED CHANGE for the year.
assuming all investments, gains, and losses are realized, and are conducted within the timeframe of under 1 year, and in the same calendar year (all these assumptions because I'm not 100% on the specifics)
in this case the gains from 30 to 60 are realized putting you up 30k for your net change.
you then lose 30k in realized losses, which brings you down to 30k, so you subtract that from your 30k NET and get 0. you then make gains back up to 60k and realize all those gains as well. your NET has now increase by 30k so 0+30 = 30m, and you owe taxes on a total of 30k NET realized gains.
of course, this is with the assumption of a 30k initial. if your initial was only 10k, and all gains/losses are realized then you have 60-10 = 50k net gains to pay taxes on
all this is why it is important to employ strategies to minimize tax burden. it may be wise in some cases to sell at a loss so that you can lower your net gains for the year and owe less taxes instead of carrying over the loss, and being unable to subtract it from what you owe. if you want to maintain that position, you can sell on Dec 31st before midnight, and rebuy on Jan 1st after midnight, just leave enough of a gap as to not cause an issue.
you can also set up Roth IRA/IRA/401k to differ or minimize tax burden. look into those as there are different tax implications for the different accounts. if you are slightly above the minimum for your tax bracket, it may be wise to use these accounts to lower your tax burden for the current year to below the limit, and stay in a lower bracket.
that's true but there is no way out of it.
I'd agree with but you could still be over-paying by a significant amount depending on cost basis.
your situation isn't as bad as you think, as it is a relatively simple case to calculate totals for. take final-initial, the rest is accounting
>your situation isn't as bad as you think, as it is a relatively simple case to calculate totals for. take final-initial, the rest is accounting
this assumes he cashed out a net 0 amount as well
assuming a zero cost basis, and all gains are short term for 2017 calendar year, and he cashed out before the end of 2017 calendar year, then he pays short term gains tax on 100k gains with 0 cost basis so 100k-0= 100k. the short term gains rate for 2017 is identical to income tax rate. so just add your gains to your total income and pay taxes on all that as income tax.
the rest is just accounting to prove you paid at least what you owe, but with a 0 cost basis, there is a possibility that they won't care for the accounting because that is the maximum taxable amount you have. and the govt won't argue that you gave them too much. all of this is trying to find a way to only pay the bare minimum/exactly what you owe so that you get to keep what you deserve and don't give the govt more than you owe
it's not simple to calculate totals because you may have created taxable events in December (your stack was worth more)
So it's only simple if he bought 100 ETH and sold 100 ETH, not if he traded his stack around a lot. Technically you are liable for all of that accounting regardless, it's not simple math
Granted they won't even look into these trades yet
The IRS is taxing crypto to crypto to prop up the fiat dollar. That is the only reason they are doing it.
yes you are technically liable for any and all accounting, but no matter how many trades you make, if you realize all gains and losses within 365 days and within 1 calendar year, you owe final-initial = net gains/losses
assuming zero cost basis means his net gains are the maximum possible amount, and therefore it is impossible for him to have underpaid on his capital gains.
due to the fact that the rates are the same and they are both classified as income in 2017 code, you add that maximum net amount to your income and pay taxes on that depending on your tax bracket.
it is impossible to do this and still owe more taxes that you paid. knowing this, the govt is less likely to audit you because despite your lack of accounting, you are giving them the maximum amount possible, and no one, especially the govt is going to argue that you over-paid them.
I must go now, but I hope I have helped. just remember, I am not a professional, and all this must be verified, and ideally you should speak to a qualified professional.
Bro did you not just say that losses are deducted at the rate of 3k per year?
You meant NET losses then, right?
>assuming zero cost basis means his net gains are the maximum possible amount, and therefore it is impossible for him to have underpaid on his capital gains.
That's wrong, if he assumes a 0 cost basis on what he cashes out he may be liable for trades that he has not reported
Given that this is virtually all self-reported at the moment, that is a real possibility
He was assuming you realise all gains/profits for the year
legally speaking you 'realize' a gain or loss when you make a trade, which is why paying capital gains with 0 cost basis on what you cash out means you are potentially underreporting, but it's also unenforceable right now
yes, NET realized losses, my apologies.
all final figures of realized gains/losses that you owe to govt are realized NET figures. if you have greater than 3k NET realized losses, you can deduct 3k per year, and roll over anything above that to the next year.
yes, but the fact that he paid the maximum possible NET realized amount for trades within 365 days and 1 calendar year, then the audit is not a worthwile endeavor.
you realize a gain/loss when you make a trade with anything other than a fiat initial, but you are taxed on NET realized gains/losses to if you take everything out, you realize all gains and losses and you are left with the NET amount. I don't know any other way to make you see what you are not realizing.
again, i've got to go, bye
the second amendment exists for a reason you know
>you realize a gain/loss when you make a trade with anything other than a fiat initial, but you are taxed on NET realized gains/losses to if you take everything out, you realize all gains and losses and you are left with the NET amount. I don't know any other way to make you see what you are not realizing.
How does this contradict what I'm saying in any way?
>if you take everything out
yes IF you do that
I think no one here realizes crypto to crypto is not a like kinded exchange
AMERICAN HOME OF THE FREE MY ASS. NOBODY IS FREE. WE ARE SLAVES. BOW TO YOUR MASTERS OR SPEND LIFE IN PRISON KEKS
it is impossible in every sense of the word, to under-report your gains/losses if you use a 0 initial cost basis. that is where I am contradicting you.
how on earth is is possible to start with 0 net, end with 100k net, and owe more than what you owe on 100k? everything ends up as NEt gains/losses and so is accounted for in the total jeez,